December 01, 2005

NeuroInsights’ Neurotech Index reached new heights in mid November, gaining over 50% since its start in December 2003. As of November 30th, the Neurotech Index, is up 46% compared to respective gains of 12% and 11% for the S&P 500 and Nasdaq Composite Index. The Neurotech Index is also outpacing the NASDAQ Biotech Index, another life-science-oriented measure of the public markets, which has gained only 8% during the same period. This month saw several major moves in index companies.

Adolor (ADLR) was up this month on speculation that the new phase III trail for Entereg to be completed in March will address FDA concerns expressed in an approvable letter last July. Entereg, is being developed in collaboration with GlaxoSmithKline (GSK) for treatment of opiate induced bowel dysfunction.

Elan Pharmaceuticals (ELN), which will be joining NeuroInsights’ Neurotech Index in January, was boosted by news of FDA priority review for their multiple sclerosis drug Tysabri, which was voluntarily pulled in February due to potential toxicity. The drug could receive blessing from the FDA as soon as March 2006.

Pain Therapeutics (PTIE), recommended in the September issue of Neurotech Insights, gained over 40% after announcing a $400 million partnering agreement with King Pharmaceuticals (KG). A week later, the stock lost almost half of its gains after a phase III Oxytrex trial for osteoartiritis failed to meet significance on the primary endpoint. NeuroInsights believes that overall the trial data was encouraging and the stock dip provided a good opportunity to buy. The company, in a good cash position from the King Pharmaceutical partnership, intends to conduct a new phase III trial in 2006.

July 28, 2005

There is growing interest in the subject of "cognitive fitness". For example, software being developed by companies like Posit may delay Alzheimers disease and neurofeedback games like those offered by CyberLearning Technology and Imagine Neuro Solutions may improve attention and treat ADHD.

But what about emotional brain fitness? Its well known that meditation and exercise reduce anxiety, ease depression, and provide a general feeling of well being. Can principles about the brain be learned from these practices to help develop emotional fitness tools? Can biofeedback games like Wild Divine help beginner brains look more like enlightened brains without a lifetime of dedication?

Neuroscientists at the University of Wisconsin have been crossing the metaphysical divide by working in collaboration with the Dalai Lama, the state and spiritual leader of Tibet. Richard Davidsons group at the university's new $10 million W.M. Keck Laboratory for Functional Brain Imaging and Behavior used EEG to compare the brain activity of highly accomplished Buddhist practitioners to beginner volunteers while meditating on unconditional compassion.

Experienced practitioners also had increased gamma wave activity while not meditating, indicating that meditation may cause permanent changes to brain activity.

In another study, Davidson teamed up with Jon Kabat-Zinn, founder of the Stress Reduction Clinic and well known proponent of mind/body medicine. Patients in the study reporting decreased anxiety and more positive affect after meditation also showed a shift in brain activity to the left prefrontal cortex.

It's possible that neurostimulation could reproduce the positive emotional effects of meditation for people with severe depression, for example.

July 18, 2005

Neuropharmaceutical drug discovery company BrainCells Inc of San Diego announced that it has closed a $17.7 million Series A financing from leading neurotech venture funds including Technology Partners, Oxford Bioscience Partners and NeuroVentures Capital.

Recent research from scientific founder Fred Gage and others has shown that treatment with antidepressants correlates with the appearance of new neurons in animal models. Many factors, including chronic stress, can lead to neuronal atrophy in an area of the brain called the hippocampus and it has been shown that hippocampal volume is reduced in depressed patients. Contrary to long held dogma, certain areas of the brain, including the hippocampus, can be stimulated to generatenew neurons from resident neuronal stem cells and some believe that this neurogenesis may be the mechanism of action of drugs like Prozac.

While there is still some debate as to the causative link between neurogenesis and depression, BrainCells hopes that neurogenesis can be used as a marker to identify new antidepressants and mood disorder treatments. This would be a big step forward considering the current difficulty in preclinical drug discovery for these large market opportunities.

Also of note today, neurodevice company Cyberonics received FDA approval to use it's Vagus Nerve Stimulator on depression resistant patients.

June 13, 2005

When Tom Wilder left Medtronic to join the neurovascular company Micro Therapeutics he saw a major untapped market opportunity and a floundering company with the potential to execute where bigger companies, like Medtronic, were hesitating. Since then, he has quietly transformed Micro from an over hyped single product company into one with a broad technology suite. For the 2005 first quarter, net sales increased to $11.4 million, a 50% increase over net sales of $7.6 million in the comparable period a year ago.

The neurovascular intervention market, which includes specialized catheters and guidewires for reaching complex cerebral arteries along with stents and embolic coils for treating brain aneurysms, was almost $500 million in 2004 with 20% annual growth. While Boston Scientific (BSX) is far and away the market leader in the space with 60% market share, smaller companies like Micro Therapeutics, Micrus, and Microvention are showing that they can compete by focusing on specific needs of neurovascular physicians and continuing to introduce innovative products.

When Micro went public in 1997 (MTIX), the focus was entirely on their liquid embolic product, Onyx, which can be used to prevent hemorrhagic stroke by stabilizing aneurysms (weak and bulging areas of a blood vessel). When Onyx suffered a major setback in 2002 many investors ran for the hills. The risk of using a liquid embolic to fill most aneurysms, considering that some of the liquid polymer might be placed into the blood supply and even clog normal vessels, was simply too high to justify its use under normal circumstances.

However, the company continued to develop Onyx for appropriate indications including sealing of arteriovenous malformations (AVMs) prior to surgical removal and filling of irregular aneurysms. After using Onyx to treat over 5000 patients in Europe and completing final labeling discussions with the FDA last month, Micro expects to receive PMA approval for use of Onyx in AVMs any day now.

But the real story is not with Onyx anymore. Under Wilders direction, the company acquired more conventional embolic coil technology from Germanys Dendron and subsequently developed it in house into revenue generating products. Micros latest generation coil, dubbed ICE, which will be introduced this year has improved resiliency over standard platinum coils which helps keep the coil from deforming over time and collapsing under pressure from the blood vessel. Additionally, the coil has bioactive properties to promote healing of the aneurysm neck where it buds from the blood vessel.

Micros coils and other bread and butter products for neurovascular surgeons generated $35 million in 2004 revenue with almost 50% annual growth. With the closing of their German plant, the company is continuing to improve product margins, currently at 64%, and expects to be profitable by Q4.

While MTIX is generally being overlooked, their majority stock holder (70%) and product distributor, ev3, is about to go public. The pricing of the IPO announced 5/31 indicates that the company expects to bring in about $200 million to pay off debt and pursue corporate objectives. With Micro's products representing a good part of ev3's revenues, it's not much of a stretch to speculate that Micro shareholders might benefit from a successful ev3 IPO.

January 12, 2005

The 23rd Annual JP Morgan Healthcare Conference is underway this week in San Francisco where 230 public and 50 private companies are presenting their latest findings to over 6,000 healthcare executives and investors.

Of the many areas covered, the insomnia market was especially well represented. JP Morgan specialty pharmaceutical analyst Corey Davis provided an excellent overview of the growing insomnia market where Ambien currently holds 67% of the $2.3 billion market.

But Ambien's future doesn't look bright as new treatments with fewer side effects and less chronic treatment risks emerge, including Sepracor's Lunesta and Neurocrine's Indiplon. JP Morgan analysts suggested that Lunesta, which promotes sleep maintenance, in addition to sleep induction, will be able to gain a major share of the insomnia market in only two years. Lunesta's potential for market dominance is further blostered by Neurocrine's recent technical setback with the FDA that will slow down its market entry.